IMF urges Pakistan to raise general sales tax

WEB DESK: In a recent development, the International Monetary Fund (IMF) mission has recommended that Pakistan increase its general sales tax (GST) to 18 per cent.

This proposal emerged during extensive discussions held over four rounds between the IMF delegation and Pakistani authorities regarding a potential new loan arrangement.

The IMF mission highlighted concerns about Pakistan’s current sales tax collection system, noting that the central government is responsible for collecting sales tax on commodities.

To address this issue, they proposed that sales tax collection should be solely managed by the federal government.

Additionally, the IMF suggested abolishing GST exemptions and raising the tax rate to 18 per cent on both commodities and services.

Furthermore, during the fourth round of talks, the IMF delegation pressed for reforms in the insurance sector, advocating for the establishment of a separate regulatory body.

As part of these reforms, the IMF recommended the privatisation of three government-owned insurance companies.

It’s worth noting that the IMF delegation’s visit coincides with Pakistan’s expressed interest in securing another program with the international lender to alleviate financial constraints.

The discussions underscore the ongoing dialogue between Pakistan and the IMF as they navigate economic challenges and seek viable solutions to bolster the country’s financial stability.

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